PSE justifies decision to delist Calata

The Philippine Stock Exchange (PSE) was left with no choice but to delist agribusiness enterprise Calata Corp. after following due process and doing its job as mandated by the local securities law, the chief of the local bourse said.

Explaining to small investors who were trapped as shareholders of a company without trading liquidity, PSE president Ramon Monzon said the PSE had done all it could to protect the rights of the investing public.

However, he said the delisting had to happen because the penalties mandated by the Securities Regulation Code called for it and the controlling shareholder of Calata had rejected all proposals to buy back shares to allow the small investors to exit.

Even if the penalty called for involuntary delisting, Monzon said the PSE had earlier offered Calata and its chair and president Joseph Calata the option of voluntary delisting provided they would do tender offer to minority shareholders.

A voluntary delisting, in contrast to involuntary delisting, gives the company the option to relist on the bourse in the future.

“You read his press release saying he could not do the tender offer because it (company) did not have the money or it did not have enough retained earnings. I beg to differ on that because when we looked at the unaudited financial statements as of June 30, the company had about P450 million in retained earnings so it could have undertaken a tender offer,” Monzon said.

At a book value of P3 per share, a tender offer would have cost about P1 billion. As such, Calata rejected the proposal to make a tender offer, saying this was not feasible and would bring the company to bankruptcy.

“Nobody said the tender offer price should be at book value,” Monzon said. “If you are sincere in trying to save your stockholders, if the book value is P3 and if the retained earnings could answer for half, then do it,” he said.

“There’s no rule that says the tender offer should be at the book value,” he said, implying that Calata’s excuse was not acceptable.

He said the delisting had to happen, otherwise, it would be the PSE that would be penalized for not doing its work as a self-regulatory organization.

“We read a lot of blogs and a lot of comments saying PSE is not thinking about small investors and minority investors. That’s not true,” he said.

Calata was stricken off the PSE roster of listed firms on Dec. 11. Company chief Joseph Calata was perpetually banned from sitting on any board of a PSE-listed firm along with his then compliance officer, Jose Marie Fabella. For the rest of Calata’s board members, they are banned from the PSE for five years.

The PSE found out that Calata had committed a total of 29 violations of disclosure rules, such as failure to disclose trade transactions over shares held by its director/officer. It also established that Calata had committed 26 violations of the “black-out rule,” which prohibits a director or principal officer of an issuer from trading securities during the prescribed period during which a material nonpublic information was obtained.

During the delisting proceedings, it was established that certain directors and officers of the company traded Calata shares on various dates prior to the expiration of the black-out period.

Separately, the Securities and Exchange Commission filed a complaint against Calata for allegedly misleading investors about its gaming diversification.